Norway Economy Showing Recovery Signs, Halvorsen Says
Norway is showing signs of recovering from its first recession in two decades as the biggest fiscal stimulus plan in more than 30 years rekindles consumer demand, Finance Minister Kristin Halvorsen said.
“I am a bit more optimistic than a month ago because we see that the financial markets are functioning better than they used to, public demand is increasing and the situation in the housing market is a bit better,” Halvorsen said in an interview in Oslo today. “The uncertainty is still very high.”
The world’s fifth-largest oil exporter is struggling through an export-led recession after a decline in global trade forced companies to cut jobs, sapping local demand. The government of Jens Stoltenberg, which faces an election in September, has pledged to spend 3 percent of gross domestic product to reduce unemployment.
The stimulus package has helped soften the effect of the global crisis on Norway, the only Scandinavian state that isn’t a member of the European Union low fee payday loans.
The central bank on June 17 cut the benchmark interest rate for the seventh time in eight months to a record low of 1.25 percent to revive the economy even as inflation remained above its 2.5 percent target for an 11th consecutive month.
“The fall in household demand seems to be coming to a halt,” Norges Bank said in its monetary report. “Petroleum investment is holding up and growth in public demand is rising.”
The government expects Norway’s mainland economy, which excludes oil, gas and shipping, to shrink 1 percent this year before returning to growth next year. That compares with a 1.5 percent output decline forecast by the central bank for 2009.
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